The majority of U.S. states charge a sales tax on retail goods and services. New York state is no different. The state’s sales tax is relatively low but once you add on taxes from individual counties and cities, it can add up to a substantial chunk of change. Read on as we explain what New York sales tax is and how it differs across the state.
What Is Sales and Use Tax?
When you read about sales tax in New York, you’ll see talk of “Sales and Use Tax.” What is use tax and why do you have to pay it?
As you might know, sales tax applies to goods and services you buy within a state. Use tax is an equivalent tax that you pay on items that you purchase outside of the state. It ensures that out-of-state retailers don’t benefit just because they don’t have to pay the in-state sales tax. The use tax in New York is the same as the sales tax. The two taxes are also mutually exclusive so if you pay one of them, you won’t have to pay the other.
New York State Sales Tax
In the state of New York, the sales tax that you pay can range from 7% to 8.875% with most counties and cities charging a sales tax of 8%.
The sales tax rate in New York actually includes two separate taxes: sales tax and use tax. The state groups these together when talking about sales tax and both taxes are the same rate so it doesn’t matter where you purchase things. (Read more on sales tax vs. use tax in the next section.) New York sales tax is currently 4%. Each county then charges an additional sales tax between 3% and 4.5%.
What’s Taxed and What Isn’t?
The majority of retail sales are subject to sales and use tax in New York. Some things, like cars and other motor vehicles, are taxed on the residence of the buyer and not the place where you actually buy the vehicle.
There are also a number of things that are exempt from sales tax. Some common examples are groceries, newspapers, laundering and dry cleaning, prescription drugs and feminine hygiene products. Clothing and footwear are not taxable if they are less than $110. If they are over $110, they are subject to regular sales tax rates. Any water delivered through mains and pipes is not taxable. However, public utilities like gas, electricity and telephone service are subject to sales tax.
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